3)Withholding tax on ‘benefit or perquisite’
The Finance Act,2022,inserted section 194R in the Income-tax Act with effect from 1 July 2022.Thisprovision stipulates an obligation on any person providing any ‘benefit or perquisite'(of more than INR 20,000) to a resident arising from their business or exercisingof profession to ensure that tax is withheld at the rate of 10%.
The authorities have also issued several quide lines to remove difficulties in the implementation of section194RoftheActincludingclarifyingapplicabilityin case of non-cash benefits,sales discount,cash discount,rebates,free samples,etc.Several aspocts such as the definition of benefit or perquisite andwithholding tax on lovalty points. wallet money or aline crodit which expire.etc.cremain unaddressed. The newly introduced provisions will increasethecompliancerequirementsandstart-ups having such payouts/ distribution will needto strategise to adhere to these provisions.
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